I am a technology evangelist, an investor, a commentator and a business adviser. I am the director of Diversity Limited, a business that is a vehicle for my work in investment, advice and consultancy. Diversity has holdings in manufacturing, property and technology companies and undertakes advisory work. For my complete disclosure statement, click here. I have a background across various industries, owning businesses in the manufacturing, property and technology sectors and make my day to day living consulting to technology vendors and customers. I cover the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. My areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

From Copenhagen To The Valley - OneLogin's Journey

An ongoing debate in the technology industry revolves around the question of whether startups need to be situated in Silicon Valley to increase their chances of success. While many people spend lots of time talking on a conceptual level about the pros and cons of Silicon Valley, startups continue to be created, funded and sold on a much more frequent rate in the Valley than anywhere else. Recently I spent some time talking to Thomas Pedersen, CEO of OneLogin, about his journey personally and with OneLogin.

OneLogin provides enterprise Single Sign On (SSO) services. Essentially the theory goes that employees within an enterprise are using an ever increasing number of discrete applications – having to remember individual usernames and passwords – that actually leads to reduced security as people use duplicate passwords or resort to the approach of having passwords written on Post-It notes. SSO products aim to overcome this by offering enterprises a single sign on approach across all of their services. SSO is a busy sort of a space – alongside OneLogin startups Okta and Ping IdentityPing Identity offer similar services and Salesforce recently introduced its own SSO offering. OneLogin recently raised $13M in its series B funding round, and is increasingly seen as one of the hot companies in the space. I wanted to dive into the journey OneLogin has taken, and try and discover how much of that success is a factor of their location.

Pedersen, as the name suggests, is Danish by birth. He has worked in the software business since he was 17 and spent 14 years working for a telecommunications billing company in Denmark. During the dotcom boom the company raised $70M which evaporated when the bubble burst – Pedersen relocated to the US to work for the firm that has bought the company in a fire sale. In a story that matches that of so many technology immigrants, Pedersen got his greencard, quit his job and started working on a startup. When that startup folded, Pedersen moved to Southern California and started working with Zendesk, another company of Danish origins.

While working for Zendesk, where Pedersen headed up business development, he became involved with a relationship with Sun Microsystems. Sun wanted to build a provisioning gateway to enable Zendesk to be used with large enterprises. The traditional approach towards this problem got Pedersen thinking and, again in quintessential startup style, he contacted his brother in Denmark, got him to buy a ticket to the US and together they beavered away and created a proof of concept product. Again Pedersen seized the day – he raised a small seed round, quit his job at Zendesk and, despite having recently been divorced and with a family to support, he jumped once again into the unknown to build a new company.

Pedersen launched OneLogin in 2010 and quickly achieved success with enterprise customers – organizations such as News CorpNews Corp, NetflixNetflix and Steelcase use the product for their SSO needs and this led to funding from some big name VC companies – and this is the key point that Pedersen sees a a differentiator for startups basing themselves in the Valley. Pedersen was an immigrant and has never done a startup before. He strongly believes that in the Bay area access to both customers and capital is fundamentally different to elsewhere. Pedersen was able, on a daily basis, to meet with technology companies in order to negotiate contracts and integration deals – the company lives in the middle of the global technology hub and the connections that this enables are priceless. Add to this the fact that Pedersen believes that there was little chance of him getting funded in Southern California – no one was willing to take a punt on anyone that was even that short distance form the Valley. As Pedersen says, distance makes a difference. While it might be easy for entertainment or fashion startups to be funded outside of The Valley, for technology, a non Valley address can be a real deal killer. It is very hard to complete with the momentum in the Valley – talent, funding and prospective customer gravitate to the Bay Area.

I pointed out to Pedersen that Zappos founder Tony Hsieh is trying hard to built a technology startup ecosystem in Las Vegas – Pedersen feels strongly that that is an anomaly and one which only a massive figurehead such as Hsieh (and a massive bank balance as well) can create.

For someone who both lives outside of the Bay Area, and also invests in companies around the globe, Pedersen’s viewpoint is something of an eye opener – it really underscores the barriers to success that being outside of The Valley creates. it’s not impossible to execute elsewhere, but as Pedersen points out, shifting to the epicenter of global technology is an advantage that, all things being equal, can make the difference between success and failure for a startup.

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users. Read more about Ben here.

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